Wal-Mart Competitive Advantage
Wal-Mart is by far the world’s largest retailing corporation and its 1. 4 million employees makes it the biggest global employer in private industry (Robert Grant 2004). It has achieved this unique position in a little over forty years. What is the competitive advantage that this company enjoys and is it sustainable? This paper has sets out to explore this hypothesis and concludes that, providing the correct strategies are maintained, it is feasible that this position can be maintained.
As of 2004, Wal-Mart had rapidly expanded to a position where it had over three thousand, five hundred stores of various sizes in the US and representation in nine other countries, of which Mexico and the UK are its largest international forays (see appendix 1). It is a company, which is at the same time feared and respected by competitors. The Wal-Mart Corporation, as a retailing phenomenon, has been the subject of many studies and researches over the years in an attempt to identify what sets it apart from others.
In our view, an analysis of the organization’s strategy over a variety of its business activities, will provide the answer to how Wal-Mart has been able to build, maintain and sustain the levels of growth that have been achieved. In essence, these can be defined within three main areas. Distribution and Suppliers A key area for the success of any retail business lies in the ability to harness distribution of products and the relationship it achieves with suppliers, in an effort to create a perfect supply chain.
The closeness to perfection determines the competitive advantage for the business. In respect of distribution, as Mike Troy (2003) states in his article “Wal-Mart operates an unrivaled global network of 146 distribution centers. ” With more having been added to this number in recent years, the business has been able to achieve near optimum lead times, resulting in considerable savings, which of course increases the bottom line profits.
Ensuring efficient transportation of products from supplier, through distribution centers to the retail store by the most time and cost effective method is vital in an industry where margins are historically small is essential. Another key aspect of a distribution strategy is its response to change. All business exists in an every changing environment. Whether this occurs within the immediate locality or, because of the continuing globalization of commerce, (Comerford and Callaghan 2003), organizations need to adapt to and encompass change with rapidity.
One of the most influential aspects of change to influence the supply chain over the past few decades has been caused by the advances in technology. Wal-Mart has been quick to recognize the impact and advantages of these new technologies and incorporate them within the business structure. In 2003 for example, in conjunction with a number of its suppliers, Wal-Mart conducted a series of RFID experiments, which concentrated on tracking products at any point of the supply chain (Mike Troy 2003).